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  • pandorabelle pandorabelle Jul 30, 2013 10:05 PM Flag

    Lakshman Achuthan: The US Entered Recession Last Year And "Is Worse Than Japan In the 90s"

    From the interview w/Tom Keene-Bloomberg TV:

    "The jobs situation is great"

    [LA] ...the job market is not doing well, all headlines aside. When you – I think the core thing here, and something that concerns us quite a bit, is the types of jobs that make money. So if you happen to be between the age of 35 and 54, since this so-called jobs recovery began three-and-a-half years ago, you’ve actually seen job losses, not gains, okay?

    Job losses for 35 to 54 year-olds approaching a million jobs lost. Now that happens to be, that 20-year span of your life, happens to be where you make the most money, and where you spend the most money. And so I think that is at the core of why, when you say, “Hey, jobs are great,” people say, “Eh, you know, it doesn't feel that way.” And they're right.

    "Who is doing well?"

    [LA] Madison Avenue is not the country. It's not the world we live in, actually. It's kind of a little bit of a bubble, and as is some of the luxury items, to tell you the truth, right? If you are doing well, financially generally, then in the recent economy, you’ve been doing very well because you’ve seen real estate prices recover sharply, and you’ve seen the stock market recover sharply. To switch gears here, it's good – If you're around Wall Street, you're probably close to the helicopters which are spewing out cash. And that's a pretty good thing.

    "But most people are not near Wall Street"

    [LA] Most people are near Main Street. And that is why there is all this kind of disconnect. The President is doing what he’s doing. The policymakers are saying – The conservatives are saying, “Hey, there’s too much regulation and too much taxing.” The liberals are saying, “Let’s do some more Keynesian stimulus and other things.”

    And I think everybody’s missing what’s going on, which is that growth is not there. Growth has been downshifting since before the Great Recession. And it's not only happening in the U.S.

    And that's ailing the aggregate economy.

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    • Great input !! Folks, please try to make your brain work properly to realize what is happening on the ground. I think, it is only a matter of time to start 2008 cycle again. If you guys remember the recent past, the market shake up started in August 2007 then magnified in 2008. It looks like history is going to repeat itself this time sooner than later. Better pay a due attention to realize what is really happening around.

    • The US is Japan. The only difference is the reserve status of the dollar has bought us more time. But when the SHTF, it will be worse for the US because most of our debt is foreign owned.

      Sentiment: Strong Sell

    • Pandora you still seem to think the economy, p/e ratios and the like matter. Why would you think this? They haven't mattered in years. The economy is obviously in recession, yet the Russell 2000 is almost 50 times earnings and likely headed for 100. There is NO connection between stocks and the economy, and may never be one again.

    • It's obvious to anyone with half a brain they are replaced jobs shipped overseas with menial, low wage part time ones without benefits and at the right time to throw in new health care bill. This is why 'It doesn't 'feel' that way.

      • 1 Reply to kone2410
      • It's sad, really...and sadder for those who don't realize hat's happening.

        The BEST part of the interview is where he calls out the Fed (lying) with the incongruity between what the Fed is saying and doing here:

        "They would like you to believe that everything’s okay, and things are relatively under control, except their actions suggest otherwise, right?

        I’ve never heard a Fed Chairman call a recession. They’ve always said there isn’t one. And then they’ve said, “if you don’t do” – or, “If I didn't do what I was doing, there would be one,” when there is, in fact, one going on, if you look at the history.

        But I just want to say plainly that you wouldn't have four years of zero-interest rate policy and quantitative easing and Q-ternity if everything was okay."

    • more...

      "but again, jobs are improving?"

      [LA] First off, all you have now are preliminary numbers... All that gets revised massively, that defines where the economy is. And secondarily, you cannot get away from the fact that 35 to 54 year olds have lost almost a million jobs since this jobs recovery began. That's where you make your money. You don’t make your money as a kid. And you don’t make your money when you're about to retire.

      "but The Fed sees growth..."

      [LA] Of course. They would like you to believe that everything’s okay, and things are relatively under control, except their actions suggest otherwise, right?

      I’ve never heard a Fed Chairman call a recession. They’ve always said there isn’t one. And then they’ve said, “if you don’t do” – or, “If I didn't do what I was doing, there would be one,” when there is, in fact, one going on, if you look at the history.

      But I just want to say plainly that you wouldn't have four years of zero-interest rate policy and quantitative easing and Q-ternity if everything was okay.

      "Short-term GDP growth might be weak but growth is around the corner"

      [LA] ...tomorrow, you're going to get a revision, and a preliminary number for the latest quarter and then a revision to the history. And when you do that, and when you see that, I want you to understand that GDP, following recessions, gets revised. It gets revised much more than you think...

      It gets revised – On the last few recessions - Two to four percentage point revision, almost always downward, following the last few recessions. And you're sitting here applauding about a 1% growth

      In the first six months you get about 10% of the revision. There are subsequent revisions to come. So tomorrow is not [the end]

      • 1 Reply to pandorabelle
      • finally...

        "but how can we be in recession if we are creating jobs?"

        [LA] ...you have had recessions where you’ve had positive job growth for eight or so months...

        In the ’73 – ’75 recession, which was a severe global recession, you had positive jobs growth. Now, to your point, there are also revisions to the jobs data. Geoffrey Moore was Commissioner of BLS at one time, and knows that the information that is used to define recession: output, employment, income and sales – Those things all get revised massively.

        Before Lehman, if you look back, those jobs data, on average, are revised down 140,000 per month. And you're sitting here, rightly reporting that we’re hoping for 150,000 to 180,000. I'm suggesting that that is well within the range of the revisions that you need to go negative. And on top of that, now, anyone who’s in the moment of their life when they're supposed to make money, is not making money. They’ve lost almost a million jobs, 35 to 54.
        I think Main Street agrees with us.

        [LA] ...This is an inconvenient thing I'm saying here, that there is no growth, and it's going the other way. Now if you're the Fed, and you're the only game in town, you're at zero interest rates, and you're trying the wealth effect, you have to say it's working, and you have to say, “Now I can taper.” If you're a politician maker, you say,

        “You should use my policy.”

        But what’s happening is growth has been declining since before the last recession. And it's not only happening here.

        On The US Becoming Japan,

        Five years ago, the summer before the Lehman collapse, ECRI’s research found that U.S. economic growth had been stair-stepping down in successive economic expansions, going back to the 1970s. So, even before the Global Financial Crisis (GFC) and deleveraging concerns came to the fore, we predicted a feeble economic expansion to follow the then-ongoing recession.

 
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